Owning the Debate

One point Paul Krugman makes here is that the terms of the bailout were sharply constrained by the political strategy chosen by the Democrats. When Pelosi and Reid decided that this bill would not go through without Republican votes because Democrats would not be demagogued for cleaning up the mess caused by deregulation, they took more sharply liberal options like nationalization off the table.

That's true, but I think I'd make a different political point. Henry Paulson unveiled his plan on Friday the 19th, and that was when the frame of the debate was set. And that frame was: purchase of troubled assets. At that point, virtually no one had so much as mentioned large scale nationalizations as a potential solution to the banking crisis. It just wasn't on the public radar screen.

Now, maybe that wouldn't have mattered. Maybe our current political coalition wouldn't have been willing to consider it regardless. But virtually everyone agreed that action needed to be taken quickly to prop up the financial markets, and under circumstances like that there's simply no chance of popping up at the last minute with a huge new proposal and thinking it has any chance of passing. If large-scale nationalization was really the preferred solution among liberal activists, the time to start pushing it was before Paulson and Bernanke introduced their bill. Doing it in the middle of last week, and then complaining that it didn't get seriously considered, displays a failure of vision on the left, not from its congressional leadership.